Holt Mfg. Co. v. Jaussaud

• Citation: 132 Wash. 667,233 P. 35
• Decision Date: 16 February 1925
• Docket Number: 17850.
• Court: Washington Supreme Court
• Parties: HOLT MFG. CO. v. JAUSSAUD et al.

233 P. 35

132 Wash. 667

HOLT MFG. CO. v. JAUSSAUD et al.

No. 17850.

Supreme Court of Washington, En Banc.

February 16, 1925

Appeal from Superior Court, Walla Walla County; Mills, Judge.

Action by the Holt Manufacturing Company against Leon J. Jaussaud and others. Judgment for plaintiff, and defendants appeal. Reversed.

Tolman C.J., and Bridges and Parker, JJ., dissenting.

Sharpstein Smith & Sharpstein, of Walla Walla, for appellants.

Hamblen & Gilbert, of Spokane, and Evans & Watson, of Walla Walla for respondent.

FULLERTON J.

The contract between the parties to this action was in the form of a written order made by appellant Jaussaud and accepted by respondent, the Holt Manufacturing Company, for the purchase and sale of a particularly described caterpillar gas combined harvester. The writing recites the sale of the harvester to appellants, and provides that it is to be shipped to them at a certain railroad station in eastern Washington. The appellants agreed in the writing to pay therefor $4,550. One hundred dollars was paid in cash on the execution of the contract, and $300 additional was agreed to be paid on the arrival of the harvester at the station, $2,250 August 1, 1921, and $1,900 August 1, 1922, the deferred payments drawing interest. The contract further provided that:

'The undersigned (appellants) hereby expressly agree to execute notes for the above deferred payments, and to give as security therefor a first mortgage upon said caterpillar combined harvester herein mentioned on arrival at the station designated above. * * * Said mortgage shall be in the usual form, and shall require the mortgagor to pay all taxes assessed against said caterpillar combined harvester, together with all other liens; to keep the same insured against loss or damage by fire from the time of its receipt until the payments are fully made. Insurance policy to read 'loss, if any, payable to Holt Manufacturing Company, Stockton, Cal., mortgagee, as its interest may appear.' * * * Should the undersigned receive said caterpillar combined harvester without executing the notes and mortgage above mentioned, he hereby waives all claims under said mortgage. * * * And it is hereby expressly agreed that the Holt Manufacturing Company does not part with the title to the said Caterpillar combined harvester, but retains and holds the title and ownership thereof absolutely until said notes and mortgage are executed and delivered.'

In due course the harvester was shipped to the designated station, where it was unloaded and put into possession of appellants, at which time they were requested to sign the already prepared notes and mortgage provided for by the contract, but they did not then sign them, requesting that they be sent to Walla Walla for that purpose. In due course they were so forwarded, and appellants were again requested to sign them, but they refused to do so, because, as they claimed, the mortgage did not comply with the terms of the original agreement. Meanwhile, appellants had taken the harvester to their farm, set it up, and had done two or three days work with it, when it was totally destroyed by fire without their fault. The notes and mortgage were never executed. The first deferred payment of $2,250 becoming due and remaining unpaid, respondent, under the terms of the contract, declared all of the deferred payments due and sued therefor, the suit being based upon the contract from which we have quoted.

The chief defense was that at the time the machine was destroyed the title thereto was in respondent, and that the consideration failed because of the destruction of the harvester. When all of the testimony had been taken respondent moved that the case be withdrawn from the jury and for judgment in its favor, and at the same time appellants made a like motion, and by agreement the case was taken from the jury and left to the determination of the court, which entered judgment for respondent, from which appeal is taken.

Appellants in their brief put the issue as follows:

'A single question is then presented to this court, whether, under conditional sale contract, where the absolute and complete title to the property is vested in the seller, and where, before any payments become due on the part of the prospective purchaser, the property is accidentally and without fault destroyed by fire, the loss falls upon the owner or the prospective purchaser.'

Where there is an ordinary executory contract of sale of a specific chattel, the general rule is that if the property agreed to be sold is destroyed before the consummation of the sale, the loss will fall upon the vendor because the title is in him; in other words, under such circumstances the loss follows the title. 24 R. C. L. 494. Thus, if two parties enter into a contract, one agreeing to sell and the other to purchase a designated chattel, payment to be made at the time of delivery, and before the agreement is consummated by delivery the article is destroyed, the loss must be borne by the seller, and he has no rights against the purchaser, nor has the latter any rights against him. Hence, it becomes essential to determine whether the same rule applies to a contract of conditional sale. The important parts of the present contract were that appellants agreed to pay a designated sum at certain fixed periods. When the harvester was received by them they were to execute notes evidencing the deferred payments and secure the same by a mortgage on the harvester. Upon that being done the complete title to the machine would vest in them. The title to the harvester was to remain unconditionally in respondent until payment was made, either by giving the notes and mortgage or otherwise. Appellants were to have and actually did have possession of the harvester, but it was plainly the intention of the parties that the title should remain in respondent until it was paid for. The whole transaction might easily stand upon the written contract, even though the notes and mortgage were never given; in fact, it seems to have been contemplated that that might be the situation, for the contract provides:

'Should the undersigned (appellants) receive said caterpillar combined harvester without executing the notes and mortgage above mentioned he hereby waives all claim under said mortgage.'

But in that event it further provided the title was not to pass until payment was actually made. The question then is: Upon whom does the loss rest under such a contract?

While the weight of authority seems to be that the purchaser must bear the loss, that rule is generally sustained where a different rule obtains than obtains in this state as to the nature and effect of the conditional sales contracts. The following authorities support the doctrine, 24 R. C. L. 494; 6 Am. & Eng. Encyc. 455; Burnley v. Tufts, 66 Miss. 48, 5 So. 627, 14 Am. St. Rep. 540; Harley & Willis v. Stanley, 25 Okl. 89, 105 P. 188, 138 Am. St. Rep. 900; Marion Mfg. Co. v. Buchanan, 118 Tenn. 238, 99 S.W. 984, 8 L. R. A. (N. S.) 590, 12 Ann. Cas. 707; Hollenberg Music Co. v. Barron, 100 Ark. 403, 140 S.W. 582, 36 L. R. A. (N. S.) 594, Ann. Cas. 1913C, 659; Whitlock v. Auburn Lumber Co., 145 N.C. 120, 58 S.E. 909, 12 L. R. A. (N. S.) 1214; Exposition Arcade Co. v. Lit Bros., 113 Va. 574, 75 S.E. 117, Ann. Cas. 1913D, 335; Tufts v. Wynne, 45 Mo.App. 42; Lavalley v. Ravenna, 78 Vt. 152, 62 A. 47, 2 L. R. A. (N. S.) 97, 112 Am. St. Rep. 898, 6 Ann. Cas. 684.

While the various authorities in support of the view differ somewhat in their reasoning, the general trend is expressed in Burnley v. Tufts, supra, where the court said:

'Burnley unconditionally and absolutely promised to pay a certain sum for the property the possession of which he received from Tufts. The fact that the property has been destroyed while in his custody and before the time for the payment of the note last due, on payment of which only his right to the legal title of the property would have accrued does not relieve him of payment of the price agreed on. He got exactly what he contracted for, viz, the possession of the property and the right to acquire an absolute title by payment of the agreed price. The transaction was something more than an executory conditional sale. The seller had done all that he was to do except to receive the purchase price; the purchaser had received all that he was to receive as the consideration of his promises to pay. The inquiry is not whether if he had foreseen the contingency which has occurred he would have provided against it, nor whether he might have made a more prudent contract, but it is whether by the contract he has made his promise is absolute or conditional. The contract made was a lawful one, and as we have said, imposed upon the buyer an absolute obligation to pay. To relieve him from this obligation the court must make a new agreement for the parties, instead of enforcing the one made, which it cannot do.'

24 R. C. L. supra, discussing the question, says:

'The authorities are not in accord as to the liability of the buyer for the unpaid part of the agreed price where the property is accidentally destroyed while in his possession and without his fault. According to the better view, if the buyer has entered into an unconditional promise to pay the price, the fact that the property is accidentally destroyed while in his possession does not relieve him from liability for the unpaid and subsequently accruing installments of the price; and this is held true though the contract of sale did not contain an express promise on the part of the buyer to pay the price. * * * The reason for this view is that the buyer's right to the possession before default, and his right to acquire the title by the payment of the agreed price, constitute

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